What is a Good Credit Score?

What’s a Good Credit Score?

Your credit score is a number from 300 to 850. It is made up of a variety of different factors that lead to the final number. So, how do you know what’s a good credit score? Or, more importantly, what’s a credit score that is high enough to accomplish whatever it is you are looking to do?

First let’s clarify. When you ask, “what’s a good credit score?” in the United States, you are referring to a FICO score which is the best-known and most widely used credit scoring model. It is based on information found in your credit files, which are based on your personal financial history.

For any given agency, the exact formulas for calculating credit scores are secret, but potentially includes (in decreasing order of importance) your payment history, current credit utilization, length of your credit history, types of credit used, and recent searches for new or additional credit. There are also other special considerations which can impact your credit score.

According to FICO the median credit score is 723. Median is not the same as average, and the average is not disclosed. Instead, the median simply means that if your credit number is a 723 then there are just as many people who have a higher score as have a lower one.  In other words a score of 723 is right in the middle of the population.

Besides the magic 723 value there are a number of different classifications in what is viewed as a good credit score. The ultimate authority is, of course, the credit or lending institution you are working with. They will set their own rules as to what your credit requirements must be in order for you to take advantage of their services.

OK, the Numbers: What’s a Good Credit Score?

As a guideline, you can consider that any number at 760 or higher is an excellent credit score, and you’re likely to get the best lending rates available. Scores of 700 to 759 are still considered very reasonable.

The range of points that truly answers the question varies a bit. I have seen the acceptable range cut off at 680 or just about any point as low as 650, depending on who’s opinion is involved.  To still give you a reasonable shot at getting a loan, then, let’s define the suitable range of credit scores as anything at or above 680, as that seems to fit all models.

Scores down to 620 are still considered OK for many applications. Below this number, down to 580, is considered rather poor. And anything below 550 is very poor. At these low levels it is doubtful you’d qualify for any loan, but if you do, you’d pay very high interest rates to compensate the lender for the increased risk they are taking.

So, did this answer your question about your credit score? It seems for most reasons that require good credit numbers, you should try to have a score of 680 or higher. Please review the resources on this site to help you learn more about your credit score and, if needed, how to manage and improve it.

There are handy tips and services that can help. And here’s a tip right now… Remember, as your credit balances rise, your credit score will fall.  It’s an inverse property that you have to keep aware at all times.  You always want to focus on the percent of your card you are utilizing.  Having maxed out credit cards is a giant red flag to possible lenders.

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